March 4, 2019

Construction in 2019: 3 Trends You Need to Know

With 2018 behind us, it’s time to create the blueprint and lay the foundation for a successful 2019.

Before you develop your plan for the new year, it’s helpful to understand the upcoming trends that will impact construction firms.

(Learn why architecture, engineering and construction (AEC) is on the verge of a marketing and business development revolution.)

Below, we’ll cover the trends you need to know to navigate 2019 successfully.

1. Commercial Construction Work Will Decrease


According to Robert A. Murray, chief economist at Dodge Data & Analytics, while construction overall will hold steady, the volume of commercial projects is expected to drop by 3 percent.

This follows the current trend — the booming economy is slowing down.


CNBC reports that “the economy’s performance peaked in the second quarter [of 2018] and is expected to increasingly lose steam, with growth slowing to a crawl and a recession looming.”

The report goes on to explain that, while growth is slowing — and in the case of commercial construction, may reverse — the looming recession will likely hold off until 2020.


Even if a recession does hit in 2019, some firms won’t feel the impact right away. In a report titled Signs of a Recession? Potential Impacts on the US Construction Market, MGAC explains:

“As in all recessions, some geographic areas will be hit earlier and harder than others. Cities with markets already operating over-capacity with stretched labor pools such as San Francisco, Los Angeles, Washington DC, and Seattle may be less affected than others, given the diversity and relative strength of their economies. Cities more tied to a specific industry, or without diversified business bases may face more severe contraction.”


To mitigate the impact of a future economic downturn, Jan Flesher, director of client advocacy at Cosential and former AEC marketer of 30 years, recommends getting internal departments on the same page now.

“The beauty of firms who recognize that operations, business development, marketing, and staffing need to align with their strategy is that even the largest of them are very nimble and can react as changes occur,” she wrote in an article on PSMJ. “The firms are more readily prepared for fluctuations in markets and economic downturns.”


Bill Conerly, Ph.D., corporate economist, and consultant, suggests taking things a step further by developing a contingency plan.

“Sketch out action steps to take if revenue turns down,” he wrote in an article on Forbes. “This can be done on a single sheet of paper, not a three-ring binder. Having this outline in place helps weather a recession in two ways. First, having the plan in place will speed up the action, which is critical in a recession. Second, developing the plan in relaxed times avoids the panic that often leads to the worst possible decisions. Consider core values and long-run strategy when developing your recession contingency plan.”

In addition to developing a forward-looking strategy, there are tactics you can implement now to ease the effects of a future recession. Construction Executive offered the following advice:


1. “Identify the most profitable niches, jobs, and replicate them.”

It’s important to understand what types of projects your firm is likely to win and how they impact your bottom line so you can develop a systematic, repeatable sales process.

Analyze wins and losses by geographic locations, partnering firms, market sectors, project type, lead source, and more. (For more information about identifying where your most profitable projects come from, download How to Pursue the Right Projects with Ruthless Efficiency.)


2. “Establish a marketing budget.”

While the point Construction Executive makes here is that too many organizations focus on marketing when times are good, we think it’s important to mention that too few firms focus on marketing when times are bad.

If you want to navigate a recession successfully, invest now in marketing programs that will yield long-term gains or set aside marketing funds for those times when lead generation is most important.


3. “Solidify relationships.”

Relationships form the backbone of successful sales. Don’t neglect relationships now, only to scramble to rebuild them when times are tough. That comes across as disingenuous and desperate and will likely backfire.

“You want to be proactive, rather than reactive,” said Stephanie Fortner, implementation specialist at Cosential and former AEC business developer and marketer with 25 years’ experience. “Because nine times out of 10, what’s going to set you apart is the relationship.”

(Want tips on how to develop and maintain relationships? Download How to Build Trust and Win High-Revenue Projects.)


2. Generational Handover Will Accelerate


FMI survey data show that firms “expect to lose between 14 percent and 20 percent of certain employee groups, including executives, field managers, senior managers and project managers over the next five years due to attrition and retirement.”

While all turnover is disruptive, leadership turnover has the highest impact … and research suggests firms’ fear over losing key leaders is well-founded.

Thousands of baby boomers hit retirement age every day.


Construction Executive put it: “The older generation is retiring at a growing rate, taking
with them decades of invaluable knowledge and expertise.”

Moreover, few firms are prepared to mitigate the loss of leadership. In fact, only 29 percent know who their next generation of leaders will be and how they will integrate them into their workforce.

Making matters worse, fewer young employees are remaining with firms long term in hopes of rising through the ranks and earning a leadership position.


According to PSMJ, young professionals are now “more loyal to their careers and their profession than to their companies. Who can blame them? In their experience, companies are created and die, are merged and acquired, at a fairly rapid pace. The only way they can have some control over their destiny is to be independent: either move among companies to find what they want or become owners fairly early.”


The article goes on to suggest that firms that wish to groom younger employees for ownership must be proactive and make their intentions known earlier on. “The most talented young professionals are educated about the world, independent thinkers, and somewhat impatient for more responsibility and financial reward. They aspire to new ownership. If you want to keep them in your firm, you must make it clear that the ownership path is open to them.”


(Download Addressing Generational Handover in the AEC Industry to learn more about this challenge and how to overcome it.)


3. Leading Firms Will Embrace New Technologies


According to Monica Moore, implementation specialist at Cosential and former AEC marketer, business developer and technology specialist, the construction industry “isn’t prone to quick changes. They’re not huge technology adopters.”

Many feel that’s already begun to change. BuiltWorlds identified 27 organizations that are investing funds in strategic technology targeted toward AEC firms.

And there’s plenty of evidence their investments will pay off.


According to CONTRACTOR magazine, “74 percent of contractors anticipate using technologies like drones, equipment tagging, wearables and virtual reality in the next three years.”

In some cases, technology use is increasing to attract the growing pool of talented millennials — who are expected to make up 75 percent of the workforce by 2025.

For many, however, the decision to adopt technology comes from a desire to empower objective, data-based decision-making.


According to Forbes, “Recent data has shown we have created 90 percent of the world’s data in the past year,” but “research is also showing that we are only using 1 percent of that data effectively.”

Technology can help construction firms buck that trend. predicts “In 2019, construction firms will further invest in their internal data collection, analytics and decision-making processes (e.g. hiring data specialists, integrating new data sets into their own internal platforms) to act upon data insights in a timely and effective manner. This will advance industry digitization efforts, firmly moving technology from the hypothetical to the practical in the new year.”


Prepare now for a successful future

All signs point toward 2019 being a year of change. Make sure your firm is preparing now to handle the upcoming challenges.


To learn how to best prepare for the challenges facing marketing and business development (BD) teams, download 4 Reasons AEC is on the Edge of a Marketing and BD Revolution.


Here are some other articles that you may like:

  1. 5 Key Takeaways from the JBKnowledge 2018 Construction Technology Report
  2. What exactly is CRM … And How Does It Help Construction Firms?
  3. Five Social Media Posts Your Construction Company Could Publish Today
  4. Technology is on the rise in construction